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The changes are expected to make the scheme simpler, and reduce the administrative burden on businesses.

The Department of Energy and Climate Change has proposed modifications to the scheme including reducing the number of fuels covered by the scheme, from 29 to just four.

It also plans to move to selling allowances based on organisations' energy usage at a fixed price, instead of having an emissions cap and holding annual auctions. This means that from the start of the second phase of the scheme in 2014, there could be two fixed-price sales per year. In the original version of the scheme, the revenue generated from these allowances were redistributed among the best-performing organisations, but since last year's Spending Review, it is effectively a tax.

"This would remove the need for businesses to come up with auctioning strategies and give price certainty to help investment decisions," the DECC said.

Other proposals include reducing the amount of overlap with other schemes, so that, for example, any EU Emission Trading Scheme sites would be automatically exempt.

Climate change minister Greg Barker said: "Businesses have made clear to me their serious concerns about the overly complex and bureaucratic CRC scheme. We've already taken action to remove 10,000 organisations from the scheme but we've got to do more to help make it easier for those organisations taking part.

"Our proposals will make it easier and simpler for businesses to feel the benefits of using less energy as well as supporting jobs in the energy savings industry."

Zahl Limbuwala, chair of BCS data centre specialist group, said: "Feedback the Institute has received shows that businesses did not understand the original scheme and how to implement it. Therefore these changes are very welcome in making the scheme easier to comply with and understand."